Category: Patents

On March 20, 2012, the U.S. Supreme Court handed down its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012). A year ago, when the Court decided to hear the case, I wrote about it in this blog. Now – a little belatedly – I am discussing the Court’s decision, as it has given the biotech industry reason to be concerned about its scope.

Prometheus was the sole and exclusive licensee of certain patents on methods for determining the optimal dosage of thiopurine drugs used to treat autoimmune diseases. When Prometheus sued Mayo for patent infringement, Mayo argued that the patents in question were invalid because they claimed subject matter unpatentable under the Patent Act, 35 U.S.C. § 101. Specifically, Mayo argued that the patents impermissibly claimed natural phenomena – i.e. the correlations between drug metabolite levels and efficacy and toxicity – and not patentable inventions. The district court had agreed with Mayo, but the Federal Circuit Court of Appeals reversed and held the patents valid. In a unanimous opinion written by Justice Breyer, the Supreme Court reversed the Federal Circuit, stating that the Prometheus patents were invalid under § 101 because the process incorporates the unpatentable laws of nature and “well-understood, routine, conventional activity previously engaged in by researchers in the field.” (p. 1294) The Court stated:

“If a law of nature is not patentable, then neither is a process reciting a law of nature, unless that process has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself.” (p. 1297)

The Court determined that the patent in question in this case did not have such “additional features.” The Court was especially concerned that future innovation could be stifled by allowing patents on certain uses of the laws of nature. The Court said that the measurement processes at issue in this case stated such a broad use of conventional procedures that they could be read to monopolize the field, making them unpatentable subject matter. The Court stated:

“We need not, and do not, now decide whether were the steps at issue here less conventional, these features of the claims would prove sufficient to invalidate them. For here, as we have said, the steps add nothing of significance to the natural laws themselves. . . .The presence here of the basic underlying concern that these patents tie up too much future use of laws of nature simply reinforces our conclusion that the processes described in the patents are not patent eligible . . . .” (p. 1302)

Not surprisingly, the decision has raised red flags in the biotech industry, particularly in the areas of medical diagnostics and personalized medical treatments. In an article in the most recent issue of the ABA Journal, author Steven Seidenberg examined the impact that the Mayo decision is likely to have on such innovation. The experts consulted for the article all had concerns about the breadth of the decision and the chilling effect it might have on future innovation. See Steven Seidenberg, New Laws of Nature Law: Ruling Questions Scientific Patents,ABA Journal (Jul. 2012), at 20-21.

There are some issues that may need resolution going forward:

● When a procedure is “less conventional” than the procedure at issue in Mayo, will it be patentable? Or must it be “unconventional” to be patentable?

● What exactly is a “conventional procedure”?

● To what degree does the case represent a broadening of the “laws of nature” exception to §101?Those in the biotech industry will need to mull over this decision as new innovations are developed.

Those in the biotech industry will need to mull over this decision as new innovations are developed.

In May 2009, the American Civil Liberties Union and the Association for Molecular Pathology filed suit, in the United States District Court for the Southern District of New York, against the United States Patent and Trademark Office and Myriad Genetics. The complaint pertained to patents that were granted on the BRCA1 and BRCA2 human genes that are mutations correlated to the increased risk of breast or ovarian cancer. Myriad Genetics designed a procedure to test for these mutations to indicate the likelihood of a woman developing either or both of the diseases. The complaint asserted that patents on genes should not be allowed because they are violative of § 101, patentable subject matter, of the Patent Act, namely all three of the judicially recognized exceptions to patentability: natural phenomena, laws of nature, and abstract ideas. Subsequently, the American Civil Liberties Union and the Public Patent Foundation filed a motion for summary judgment, in August 2009. On March 29, 2010, the District Court found that the isolated segments of DNA utilized for the diagnostic tests were “not markedly different from native DNA as it exists in nature” and held the patents granted to Myriad were not valid. Ass’n. for Molecular Pathology v. U.S.P.T.O., 702 F. Supp. 2d 181 (S.D.N.Y. 2010).

On July 29, 2011, the United States Court of Appeals for the Federal Circuit reversed the decision of the district court stating “the molecules as claimed do not exist in nature.” According to a report on msnbc.com, Bruce Wexler, a partner in the law firm Paul Hastings, commented “[t]he appeals court has now held that isolated DNA is patent eligible, and it recognized that isolated DNA has a different molecular structure than DNA as it exists in the body. That is a very significant result that is very important to the biotech industry.”

This decision is equally important to the future of the nanotech industry because the starting point for nearly all nanoparticle inventions is the same as biotech – nature. While it is well established that those materials found in nature are not patentable, the Federal Circuit has signaled its acknowledgement of the intellectual investment inherent in the advancement of science. There would have been seismic effects on the future of biotech and nanotech development had the district court’s decision been affirmed. For now, it is full steam ahead for the scientists and investors.

In 2010, the U.S. Supreme Court issued a closely-watched decision on patentable subject matter under § 101 of the Patent Act, Bilski v. Kappos, 130 S. Ct. 3218 (2010). The Court has now granted cert in another case on patentable subject matter – Prometheus Laboratories, Inc. v. Mayo Collaborative Services, in which the Federal Circuit Court of Appeals held in 2010 that certain medical inventions met the requirements of patentable subject matter in § 101. Prometheus was the sole and exclusive licensee of certain patents that claim methods for determining the optimal dosage of thiopurine drugs used to treat gastrointestinal and non-gastrointestinal autoimmune diseases. When Prometheus sued Mayo for patent infringement, Mayo filed a motion for summary judgment of invalidity, arguing that the patents in question were invalid because they claimed subject matter unpatentable under the Patent Act, 35 U.S.C. § 101. Specifically, Mayo argued that the patents impermissibly claimed natural phenomena – i.e. the correlations between drug metabolite levels and efficacy and toxicity – and not patentable inventions. In 2008, the district court granted Mayo’s motion for summary judgment of invalidity.

In 2009, the Federal Circuit reversed and upheld the patents under the “machine or transformation” test (the sole test at the time). The U.S. Supreme Court then decided Bilski v. Kappos, which we discussed in this blog a year ago. In Bilski, the Court rejected the “machine or transformation” test as the definitive test of patentability, relegating that test to one factor – “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101.” 130 S. Ct. at 3227. The Supreme Court then granted Mayo’s petition for certiorari in the Prometheus lawsuit, vacated the Federal Circuit’s 2009 decision, and remanded the case for further proceedings consistent with Bilski. The Federal Circuit decided the case on briefs, without further oral argument, and held, in light of Bilski, that Prometheus had recited patentable subject matter under § 101. 628 F.3d 1347 (Fed. Cir. 2010). Once again, the Supreme Court granted certiorari, and the Court will hear the case in the term that begins in October, 2011.

Although the Supreme Court has consistently construed § 101 broadly, the section does have limits. The Federal Circuit described one limitation as follows:

The Supreme Court has . . . established that while a law of nature, natural phenomenon, or abstract idea cannot be patented, “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”

628 F.3d at 1354 (quoting Bilski, 130 S.Ct. at 3230) (emphasis added). This is the core of the issue to be decided by the Supreme Court.

As my co-blogger, Eric Laury, now J.D., stated in his earlier post about Bilski, “biotech and nanotech patents are not theoretically involved with . . . a machine nor do they transform matter.” Bilski was good news for the bionanotech industry, but the case left loose ends. Now it appears that the Supreme Court will take another step in the direction of defining patentable subject matter for the brave new world of modern inventions. Nanotech firms, particularly those working in the area of biotechnology, should be closely watching the Supreme Court’s next move.

Mayo presented the following question in its cert petition: “Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between blood test results and patient health, so that the claim effectively preempts all uses of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve ‘transformations’ of body chemistry.”

I suspect the fact that the Court granted cert a second time in Mayo v. Prometheus may not be a good sign for Prometheus. It may mean that the Court had been expecting the Federal Circuit to reach the opposite result and wants to set the record straight. On the other hand, the Court may further refine its definition of patentable subject matter under § 101 in a way that may achieve middle ground between innovation and patent protection.

Earlier I reported here on Microsoft Corp. v. i4i Limited Partnership, then subsequently on the oral argument before the U.S. Supreme Court. The case arose from a patent infringement dispute relating to the method for editing computer documents, but generated wide-ranging interest in the business community, including developers of nanotechnology-based inventions, because of the broad legal issue addressed. i4i sued Microsoft for patent infringement, and Microsoft defended on the ground that i4i’s patent was invalid. The federal district court gave a jury instruction that the invalidity of a patent had to be proved by “clear and convincing” evidence. Despite Microsoft’s arguments that it should be easier to prove invalidity of a patent (such as by applying a preponderance-of-the-evidence standard) in patent infringement litigation, the federal district court, Federal Circuit Court of Appeals, and the U.S. Supreme Court (in an 8-0 decision) all decided that the clear and convincing standard applied.

Justice Sotomayor, writing for the unanimous Court, 131 S. Ct. 2238 (2011), based the Court’s decision squarely on Section 282 of the Patent Act, 35 U.S.C. § 282, which provides a presumption of validity to patents, and on longstanding common-law doctrines. The Court deferred to the judgment of Congress in the Patent Act, saying that “[w]here Congress has prescribed the governing standard of proof, its choice controls absent ‘countervailing constitutional constraints.” (p. 2244) No such constraints existed here. Addressing Microsoft’s other argument – that a preponderance standard should apply where, as here, not all evidence in the case had been before the PTO during the patent examination process – the Court said that information could be a factor in the jury’s decision, but did not warrant a different standard of proof. (p. 2250-51).

For nanotechnology firms with existing patents on inventions or in the R&D process, the Court’s decision is good news. It provides a strong measure of certainty and economic stability to stakeholders investing in and promoting the patented technologies. It also allows firms to bring patent infringement claims while maintaining some sense of security about their own patent’s validity. Taken together with the 2010 Supreme Court case of Bilski v. Kappos, 129 S. Ct. 2735 (2010), which retained a broad definition for patentable subject matter, Microsoft v. i4i should provide nanotech patent holders with plenty of reason to be pleased.

On April 18, 2011, the U.S. Supreme Court heard oral arguments in Microsoft v. i4i Limited Partnership, a patent case I previously addressed in this blog. The central issue before the Court involved the standard of proof used to determine the validity of a patent in patent infringement litigation. The court below had held that a party sued for patent infringement who raises invalidity of the patent as a defense must prove invalidity by clear and convincing evidence. Microsoft, the petitioner, argued that because Section 282 of the Patent Act, 35 U.S.C. § 282 – which provides a presumption of validity for a patent – does not specify a heightened standard, the standard should be a preponderance of the evidence, thereby making it easier to challenge the validity of a patent. i4i argued that the clear and convincing evidence standard, which has been followed for decades, should continue to apply. Chief Justice Roberts has recused himself from the case because of investments he holds in Microsoft.

Early in the argument, Justice Kagan noted that the early cases addressing the subject contained broad language suggesting a heavy burden of persuasion. Justice Ginsberg further noted the absence of any attempt by Congress to clarify the standard in the Act. Absent statutory language to the contrary, Justice Kagan suggested simply following precedent and applying the clear and convincing evidence standard.

Justice Breyer acknowledged that the Supreme Court could make a change to the procedural way this issue is resolved. He framed the problem as an economic one, a need to achieve balance between providing legal protection for inventions that warrant it and preventing undeserving inventions from taking advantage of the protections of patent law. One approach to the central issue in the case, he suggested, would be to ask the Patent Office for reconsideration. Another would be to let the jury apply the clear and convincing standard to the “brute facts,” then allow the judge to make the ultimate decision about validity.

Much of the questioning involved Microsoft’s argument that a clear and convincing standard is not appropriate in a case in which the PTO did not previously consider the prior art evidence introduced by the defendant in the infringement litigation. The justices considered whether accepting that argument would mean that two different standards should apply, depending on whether the evidence had been considered by the PTO. i4i countered with several justifications for applying the clear and convincing standard across the board. One point was the unfairness of a lower standard, which would make it easier for a single non-expert jury to invalidate a patent when so many parties (inventor, investors, licensees) relied upon the patent at the time it was issued. Along this vein, another approach considered by the Court during the argument was to instruct the jury to apply the clear and convincing evidence standard, but include a further instruction that the jury could consider, in appropriate circumstances, that the PTO had not considered the prior art.

The variety of suggestions discussed in the oral arguments make prediction of the ultimate result difficult. It is still possible that the Court will find a clear answer in the language of Section 282. Firms with patents on nanotechnology applications could be disappointed to find that the Court rejects an across-the-board use of the clear and convincing evidence standard. If that happens, infringers will have an advantage over original inventors, and more patents will be held invalid in court. The effect could be significant, perhaps having a chilling effect on advances in science and on investment in original inventions.

On April 18, 2011, the U.S. Supreme Court will hear oral arguments in Microsoft Corp. v. i4i Limited Partnership, in which i4i accused Microsoft of patent infringement. i4i won a verdict in the 2009 case, but Microsoft has pursued the matter on appeal, claiming, among other things, that i4i’s patent was not valid. The Supreme Court is now being asked to address the standard of proof required to establish whether a patent is invalid in patent litigation.

Section 282 of the Patent Act, 35 U.S.C. § 282, provides that “[a] patent shall be presumed valid” and imposes the burden of proving the invalidity of a patent on the party claiming that the patent is invalid. But the Act does not indicate the strength of that presumption. In 1984, the Federal Circuit Court of Appeals, in American Hoist & Derrick Co. v. Sowa & Sons Inc., 725 F.2d 1350 (Fed. Cir. 1984), held that invalidity must be proved by clear and convincing evidence. This means that sometimes invalid patents will benefit from the gloss of validity because the standard of proving invalidity is so high. Although the U.S. Supreme Court has not yet addressed this issue, Microsoft has pointed to the Court’s language in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), in support of its challenge to the clear and convincing language. In KSR, the Court stated that at least under the circumstances of that case “the rationale underlying the presumption . . . seems much diminished.”

If the Supreme Court were to reject the clear and convincing standard and impose one based upon, for example, a preponderance of the evidence, alleged infringers would have an easier time challenging the validity of the holder’s patent. All participants in patent litigation would feel the impact, including patent holders, challengers, and judges.

How will the Microsoft v. i4i decision impact nanotech firms?

Patents incorporating nanotechnology often involve newer innovations, with the patent holders seeking to establish a place in commerce. If a party challenging the patent’s validity must prove invalidity by clear and convincing evidence, the holder of the patent may have an advantage in litigation. And this litigation advantage could translate into a commercial advantage. By contrast, if the Supreme Court lowers the threshold for the presumption of validity, holders of newer and more innovative patents could lose their competitive edge. The impact in the nanotechnology field would be felt most strongly by smaller, upstart firms.

I will report again on this matter after the oral arguments on April 18.

In an earlier post, I wrote about the consternation surrounding patents on genes and the potential implications to the developing realm of nanotechnology. Recently, an amicus brief was filed with the Federal Circuit by the Department of Justice (DOJ) opposing the patents that were issued to Myriad regrding the testing for breast and ovarian cancer. Interestingly, the United States Patent and Trademark Office (USPTO) did not join the DOJ, which indicates an idealogical rift in the Obama administration. It was reported that Mr. Kappos, current director of the USPTO, ”seemed chagrined that the Department of Justice was taking a viewpoint very different from the patent office.”

The following is an excerpt from the amicus brief Table of Contents which is rather revealing and informative regarding the government’s opinion on the matter:

A. Section 101 Embraces Only “Human-Made Inventions”
B. Engineered DNA Molecules, Including cDNAs, are Human-Made Inventions Eligible For Patent Protection
C. Isolated But Otherwise Unmodified Genomic DNA Is Not A Human-Made Invention
1. Unmodified Genomic DNA Is A Product Of Nature
2. “Isolation” Does Not Transform A Product Of Nature Into A Man-Made Invention
3. Isolated Genomic DNA Is Not Patent-Eligible Merely Because It Is A Literal Composition Of Matter
4. Isolated Genomic DNA Is Not Rendered Patentable On The Theory That It Is “Pure”
5. Isolated Genomic DNA Is Not Patent-Eligible Merely Because It Is Useful Or Requires Investment To Identify

It is important to note that the DOJ is not advocating an all-out ban on patents on genes, just those that are ‘unmodified.’ Initially, this will allow for further development of the information contained in the genomic code. It seems as though the big argument revolves around the pieces of the code that are isolated, but not changed in any way. Proponents assert that there should not be the reward of patent protection based solely on finding that which already naturally occurs. Opponents argue that invention and development of specified uses for these segments of DNA would be stiffled, and the United States’ position as a global leader in the life sciences would be severely compromised.

It will be interesting to watch the development of the subject matter as it works its way through the Federal Circuit, and presumably the Supreme Court. Not only for the impact it will have on the biotechnology arena, but also on nanotech. As mentioned before, many argue that the majority of inventions involving nanotechnology do not qualify for patent protection because they are not far enough removed from the naturally occurring material they are comprised of. We shall see.

The nexus of a large number of nanotech inventions, specifically related to personalized medicine, is biological material and other naturally occurring materials. In order to obtain a patent, the inventor is essentially required to create a new composition of matter from that which occurs naturally. Until recently, scientists and inventors alike have been able to satisfy this requirement, but change might be on its way.

In May 2009, the American Civil Liberties Union and the Association for Molecular Pathology filed suit, in the United States District Court for the Southern District of New York, against the United States Patent and Trademark Office and Myriad Genetics. The complaint pertained to patents that were granted on the BRCA1 and BRCA2 human genes that are mutations correlated to the increased risk of breast or ovarian cancer. Myriad Genetics designed a procedure to test for these mutations to indicate the likelihood of a woman developing either or both of the diseases. The complaint asserted that patents on genes should not be allowed because they are violative of § 101, patentable subject matter, of the Patent Act, namely all three of the judicially recognized exceptions to patentability: natural phenomena, laws of nature, and abstract ideas. Subsequently, the American Civil Liberties Union and the Public Patent Foundation filed a motion for summary judgment, in August 2009. On March 29, 2010, the District Court found that the isolated segments of DNA utilized for the diagnostic tests were “not markedly different from native DNA as it exists in nature” and held the patents granted to Myriad were not valid. Ass’n. for Molecular Pathology v. U.S.P.T.O., 702 F. Supp. 2d 181 (S.D.N.Y. 2010) available athttp://www.aclu.org/files/assets/2010-3-29-AMPvUSPTO-Opinion.pdf.

This particular case involved the nature of medical tests utilized to screen women for the specific types of cancer. Myriad holds (held) patents on the two genes that indicate the likelihood of the woman developing cancer. Two main issues precipitated the litigation. First was the fact that Myriad charges more than three thousand dollars for its exclusive Comprehensive BRACAnalysis test. This exorbitant cost prohibited many women from being able to have the test, placing them at an increased risk of developing cancer. It was asserted that if Myriad would license the test, the cost would become more reasonable and allow for more women to benefit from the technology. This is the specific goal of personalized medicine; however that goal is more often thwarted by the exclusionary nature of patents (absent licensing and/or collaboration).

The second concern arose from those women who actually undergo testing and are delivered a positive diagnosis for possible development of cancer. Because Myriad held the patent on the test, the women were prevented from obtaining a second opinion to confirm the results prior to deciding to undergo preventative surgery. Examples of such prevention include radical mastectomies and ovarian removal surgery. The combination of these concerns cuts directly to the heart of the ongoing debate:

Should patents on biological material be allowed, and if so, what does that mean for the future of scientific research and the development of personalized medicine?

The precursor to this debate harkens back to the California Supreme Court case of Moore v. Regents of the Univ. of Calif., 793 P.2d 479 (1990), where the court was asked to decide if a cancer patient had any property rights in a commercially viable invention created from his particular cancer cells. The court ultimately decided that the plaintiff did not have any property rights in his biological materials because they considered the material discarded. The same debate takes place today with regard to human DNA, but no specific human has a specific property right to a specific segment of the human genome. As a result, scientists are able to use raw DNA and patents on genes are issued if the inventor/scientist has isolated a particular gene from its naturally occurring form, essentially creating a new composition of matter. However, in light of the decision in Myriad, the fate of thousands of patents (issued and pending) might be uncertain.

Of course, I will bring the focus back to the challenges awaiting nanotechnology in the fields of personalized medicine, molecular biology, etc. As I stated in the beginning of this post, the nexus of a large number of nanotech inventions is biological material and other naturally occurring materials. We know from the patentable subject matter paradigm, now including Bilski, that there still exists a broad spectrum of possibilities of what is considered a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof . . . .” 35 U.S.C. § 101. But, is there restriction on the horizon as a result of the Myriad decision? Only time will tell.

I recently came across a very interesting article that was written in the Summer of 2008, Nanoparticle-based Therapies in Humans: A Survey, available athttp://www.rpitechnology.com/files/NANOPA4.pdf. The subject matter deals with medical therapies for humans that contain nanoparticles. The author explores the emerging area of medicine that incorporates nanotechnology to fill the gaps of traditional delivery systems (i.e. poor water solubility and lack of target specificity). In addition to gap filling, the therapies stand poised to take the medical field to a whole new level, and will pose a myriad of challenges for the FDA, the U.S. Patent and Trademark Office (PTO), and patent attorneys worldwide.

Some Broad Background:

It is important to understand why nanoparticles are responsible for the proliferation of a new way to deliver medicine to the ailing human body. Traditional delivery systems lack the specificity element and the medicine tends to be delivered in higher than necessary doses that could lead to possible toxic exposure to the patient. Also, the human body is a hostile environment which reduces the effectiveness of traditional drugs.

The author of the article pointed out the following benefits with regard to the developments in nanomedicine:

Nanoparticles are selected for properties such as biodegradability, biocompatibility, conjugation, complexation or encapsulation and their ability to be functionalized. There are two types of nanoparticle-based therapeutic formulation: (1) those where the therapeutic molecules are the nanoparticles (therapeutic functions as its own carrier); and (2) those where the therapeutic molecules are directly coupled (functionalized, entrapped or coated) to a carrier.

Another important and desirable property of nanoparticles is the “surface area effect” that occurs. As a particle’s size decreases, the number of atoms on its surface increases relative to those at the core. This results in an exponential increase in reactivity which equates to increased efficiency and effectiveness over larger molecule delivery systems.

Patents and Commercialization:

It is critical for a company to obtain valid patents if they have any hope to profit from the research and development efforts of producing a new drug delivery system. According to the author of the article I read, the current state of nanoparticle patents is confusing at best. He states, “the proliferation of nanoparticle patent applications filed at the PTO, coupled with the continued issuance of surprisingly broad patents by the PTO, is creating a chaotic, tangled patent landscape where competing players are unsure as to the validity and enforceability of numerous issued patents.”

In an earlier post, Nanobots, Patents, and Collaboration, I proposed that innovation through collaboration is likely the most ideal way to navigate in this emerging area of technology. It seems as though there is no clear guidance in light of the Bilski decision, other than the probability is high that broad patents will continue to issue (not a bad thing, but not helpful to those involved in developing the multilayered drug delivery systems). I find myself a bit conflicted because I am a proponent of patent protection, but I am a realist and understand that the smaller the technology goes, the more overlap that occurs between competing patents. Again, I assert that collaboration is key and I look forward to participating in the process.